wall street doesn’t get it

Great article a few days back at Reuters here. It talks about the ways in which bankers have no idea what’s going on with the rest of the country.

David Mooney, chief executive officer of Alliant Credit Union in Chicago, says: “I don’t say this lightly, but the consumer is simply an income stream and exploiting that is the purpose of the banking organization.”   …………

To put it bluntly, many on Wall Street still see the events leading up to the financial crisis as a case of banks having legitimately sold something – whether it be mortgages or securities backed by those loans – that someone wanted to buy.        ………….

Maybe it is just the ethos of Wall Street, where success is defined solely by who makes the most money, that makes it hard for financiers to feel they’ve wronged anyone. But in a time of 9 percent unemployment and 15 percent of U.S. citizens receiving food stamps, some Wall Street alums say the financial elite are doing themselves no favors by giving the appearance of shrugging off the current mood.  ………..

Some of the disconnect is simply a matter of lifestyle and the fact that the super wealthy really do live differently from everyone else. Hedge fund managers and bankers fly around on private jets, live in palatial penthouse apartments overlooking Central Park and have second homes in the country.     …………

former top Pacific Investment Management Co executive Paul McCulley – “Our society was ripe for a convulsion about social justice, and Occupy Wall Street was the catalyst for that,” says McCulley. “New York can be very insular. It is not the real world and neither is Newport Beach.”  ………

Now that he’s no longer working for PIMCO, McCulley is a bit more free to speak his mind. And he says the only way to jumpstart the U.S. economy is for the federal government to get behind a serious program to encourage consumer debt forgiveness and principal reductions on mortgages by banks.     ………..

McCulley noted that mortgage firms Fannie Mae and Freddie Mac have been propped up by about $169 billion in federal aid since they were rescued by the government in 2008, yet there’s a “a moral overtone” to the argument against reducing mortgage debt burdens for individual borrowers.

Blinkers. Blinders. This typically doesn’t end well.

So, is the private sector better at asset allocation? Or does the public sector do it better? Two different mindsets, two different objectives. They overlap and are intertwined to an obscene degree, and that degree of interconnection may have gone past the point of no return. The system is out of balance. Every graph/study/analysis I’ve seen says that the boat is tipping, and no one understands what happens when it tips.

 

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